200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
December 21, 2023
To the Honorable Mayor, and Members of the City Council of the City of Santa Clarita
Santa Clarita, California
We have audited the financial statements of the governmental activiti es, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Santa Clarita, California (the “City”) and the financial statements of Air Quality Improvement Special Revenue Fund, Transit Enterprise Fund, and Open Space Preservation District Special Revenue Fund for the year ended June 30, 2023 and the Statements of Revenues, Expenditures and Change in Fund Balance for the years ended June 30, 2023, 2022 , and 2021. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, and Government Auditing Standards , as well as certain information related to the pl anned scope and timing of our audit. We have communicated such information in our letter to you dated Ap ril 10, 2023. Professional standards also require that we communicate the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the basic financial statements. As described in Note 1 to the financial statements, the City implemented the GASB 96 – Subscription-Based Information Technology Arrangements. No other new accounting policies were adopted and the application of existing policies was not changed during 2023. We noted no transacti ons entered into by the City during th e year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financ ial statements prepared by management and are based on management’s knowledge and experience about past and current events and assum ptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financia l statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
Management’s estimate of the investment fair market value is based on in formation provided by U.S.
Bank, the custodian of the investments based on interactive data. We evaluated the methods, assumptions and data used to develop the investment fair market value in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the depreciation on capital assets is based on the industry standard and past experience on actual useful life of the asset groups. We evaluated the key factors and assumptions used to develop the depreciation on capital assets in determining that it is reasonable in relation to the financial statements taken as a whole.
To the Honorable Mayor, and Members of the City Council of the City of Santa Clarita
Santa Clarita, California
Management’s estimate of the net pension liab ilities is based on the actuarial valuation on total pension liability and based on audited fina ncial statements on fiduciary net position for CalPERS plans. We evaluated the key factor s and assumptions used to develop the net pension liability in determining that it is r easonable in relation to the financial statements taken as a whole.
Management’s estimate of the net other postemployment benefits (“OPEB”) liability is based on the actuarial valuation on total OPEB liability and financial statements on fiduciary net position. We evaluated the key factors and assump tions used to develop the OPEB liability in determining that it is reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sen sitive because of their signifi cance to financial statement users. The most sensitive disclosures affecting the financial statements were:
Note 1 – Summary of Significant Accounting Policies
Note 13 – Pension Plan
Note 14 – Other Postemployment Benefits (“OPEB”)
Note 20 – Commitments and Contingencies
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumu late all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of th e misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, repo rting, or auditing matter, whether or not resolved to our satisfaction, that could be si gnificant to the financial statements or the auditor’s report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from manageme nt that are included in the management representation letter dated December 21, 2023.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other acc ountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations . If a consultation involves application of an accounting principle to the City’s financial statements or a determina tion of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the c onsulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
To the Honorable Mayor, and Members of the City Council of the City of Santa Clarita
Santa Clarita, California
Other Audit Findings or Issues
We generally discuss a variety of matters, including the a pplication of accounting principles and auditing standards, with management each year prior to retention as the C ity’s auditors. However, th ese discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the Mana gement’s Discussion & Analysis, Budgetary Comparison Schedules, the Schedules of Changes in Net Pension Liability and Related Ratios, the Schedules of Contributions – Pensions, the Schedules of Changes in Net OPEB Liability and Related Ratios, and Schedules of Contributions – Other Postemployment Benefits, which are Required Supple mentary Information (“RSI”) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the informa tion for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the Combining and Indivi dual Fund Financial Statements, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, c ontent, and methods of preparing the information to determine that the information complies with accounting principles generally accep ted in the United States of America, the method of preparing it has not changed from the prior period, and the in formation is appropriate and complete in relation to our audit of the financial statements. We compared and r econciled the supplementary in formation to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the Introductory and the Statistical Sections, which accompany the financial statements but are not RSI. Such inform ation has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Santa Ana, California